The economy of South Carolina was ranked the 24th largest in the United States based on gross domestic product in 2024. Tourism, centered around Myrtle Beach, Charleston, and Hilton Head Island, is the state's largest industry. The state's other major economic sector is advanced manufacturing located primarily in the Upstate and the Lowcountry.
Before rapidly industrializing in the 1950s, South Carolina primarily had an agricultural economy throughout its history. During the antebellum period, the state's economy was based almost solely on the exportation of cotton and rice cultivated using the labor of enslaved Africans. By the time of the American Revolution, the exportation of rice to Europe made the Lowcountry the wealthiest region in North America. Nonetheless, South Carolina's economic importance in the union began to decline following the Panic of 1819 and the expansion of cotton cultivation in the Old Southwest.
The profitability of cotton tied the state closer to the institution of slavery; encouraging planters to invest in more land and enslaved laborers to the detriment of economic diversification. In a failed attempt to stop the abolition of slavery, South Carolina was the first state to declare for secession following the election of Abraham Lincoln. The ensuing American Civil War brought freedom to the enslaved population as well as destruction and desolation to the state's economy.
In 1922, following a series of natural disasters and the arrival of the boll weevil in 1917, South Carolina could no longer rely on the cultivation of rice and cotton. Like many other states, the defense contracts that came with World War II and the New Deal construction policies during President Franklin D. Roosevelt's administration aided South Carolina's industrialization efforts. Starting in the 1960s, South Carolina became one of the first states to begin soliciting direct foreign investment which furthered the state's transformation away from agriculture and the textile industry.
Early colonial economy and background
Colonial South Carolina
Like most American colonies, the development South Carolina relied on the West Indies as a major market for exports and imports.McCusker et al. 1985 p. 165 English settlers were originally attracted to the region by two cash crops, tobacco and sugar cane.Wilson 1936 By 1660, entrepreneurs colonized the North American coastline below the Chesapeake in order to supply Barbadian consumers with both timber and produce.McCusker et al. 1985 p. 171 The colonists (numbering 4,000 by 1690, mostly through immigration) were unable to produce commodities for European markets so they traded with Barbados for "slaves, sugar, bills of exchange, and European goods." By the 1690s, South Carolina began cultivating rice. Its centrality to the colony's economy played a similar role as tobacco did in Virginia. The demand for this new staple crop grew continuously in the succeeding decades. By 1740, rice accounted for "nearly 60 percent of total exports by value" of the lower southern colonies and nearly "10 percent of the value of all commodities shipped from British America."McCusker 1985 p. 176
The economy of South Carolina was relatively diverse and wealthy compared to the other colonies in the beginning of the 18th century. South Carolinian settlers exported rice and naval stores to Great Britain, traded with Native American tribes for deer skins and enslaved people, and continued their commerce with the West Indies.McCusker et al. 1985 p. 180 During this time, Charleston was the fourth largest on the continent."Charleston County Historic Resources Survey Update" 2016 p. 34 But rice transformed South Carolina into a rice monoculture with a growing demand for enslaved laborers in the colony's rice belt.McCusker et al. 1985 p. 181 In effect, the scalability of rice led to diversified farms being replaced by specialized plantations with a large number of enslaved workers, greater wealth alongside greater wealth inequality, the emigration of capital-less and skilled labor, and finally an increased focus on trade with Great Britain at the expense of trade with the Caribbean.McCusker et al. 1985 p. 182-183 It is estimated that "between 1700 and 1775, approximately 40 percent of all Africans brought to the United States entered through Charleston's harbor.""Charleston County Historic Resources Survey Update" 2016 p. 12.
The rice plantations in the lowcountry made it the wealthiest region on the continent.Coctanis 1989 p. 90 The state benefited from its relationship with the British Empire. But, the restrictive efforts by the British to curtail sedition in the colonies and the rumored possibility that one of those efforts would be to encourage a slave insurrection led South Carolinians to declare for independence.Bass and Poole 2012 p. 14
Ultimately, less is known about the economy of the lower Southern colonies (South Carolina, Georgia, and the Cape Fear portion of North Carolina) than any other section of British America.McCusker et al. 1985 p. 169 In the case of South Carolina, this may be because the rise of an elite planter class in the lowcountry along with their concentration of power was more similar to Britain's West Indian colonies than it was to the other mainland colonies.Palmer 2014 p. 1
Debate on the antebellum South's economic system The nature of the South's slave-centered economic system during the antebellum period is still being debated by historians.Brown 2014 p. 1 The current trend in the literature is that the South had a capitalist system.Brown 2014 p. 21 According to historian Peter A. Coclanis, the study of the southern economy was revolutionized in the 1960s by Eugene Genovese who "went against the grain... that the South was ruled by a class dominated by large scale planters whose worldview was informed by the relationship between master and slave rather than by capitalist logic."Coclanis 2014 p. 352 Genovese's later work with his wife, Elizabeth Fox-Genovese, readily accepted a southern economy similar to the one that Frederick Law Olmsted described in A Journey in the Seaboard Slave States (1856), where poor white southerners were hesitant to work hard in fear of being looked down upon.Brown 2014 p. 19 Historian Roger Fogel critiqued this view of a paternalist system antithetical to the tenants of capitalism stating that the system was "unequivocally capitalist."Fogel 1989 p. 64 Alternatively, some scholars believe that South Carolina had a "dual-economy" with large plantations fulfilling the commercial activities required of capitalism while the region's yeomen farmers fulfilled the needs of a more traditional sector.Ford 1988 p. 57
Slave society
The enslavement of people from Africa was central to antebellum South Carolina's economy. The demand for enslaved laborers in the state initially increased in the 1790s in response to an ephemeral tobacco bonanza, further expansion into the state's backcountry, and an increased demand for cotton.Bass and Poole 2012 pp. 3-21Ford 1988 p. 6 In 1822, following the purported Denmark Vesey led slave rebellion, and what South Carolinians perceived to be a rising abolitionist sentiment in the North, attitudes toward slavery began to change. Essentially, it was no longer seen as a necessary evil but a positive good.Freehling 1965 pp. 53-67 According to historian Ira Berlin, in the nineteenth century, South Carolina "became a slave society rather than simply a society that held slaves."Berlin 2000 p. 142 In the 1830s, South Carolina was the only state where a majority of white citizens owned slaves.Bass and Poole 2012 pp. 23-28
The once flourishing intellectual life of Charleston (which at the turn of the nineteenth century had the nation's premier natural history museum and the largest bookstore south of Philadelphia) began to wither as the state's intellectuals spent their energy defending the institution of slavery instead of writing on other subjects.Bass and Poole 2012 p. 28 Additionally slave owning became a widely recognized symbol of respectability.Ford 1988 p. 14
According to historian Gavin Wright, fellow historians often try to explain the "rise, spread, and persistence of slavery in terms of advantages in productivity" which he believes is peripheral to understanding why the institution was central to the commerce of the southern region. According to Wright, the answer to slavery's centrality is the concept of property rights. The ownership of enslaved black laborers allowed slave owners to deploy labor in areas where white laborers would not go. Additionally, it allowed the slave owner to be mobile, to leave old land for land more advantageous to the cultivation of cotton.Wright 2006 pp. 20-25 For the majority of white slaveowners in the state of South Carolina, the property value of their slaves increased decade to decade. In the upcountry from 1850 to 1860, the total value of personal property, which was mainly slave property, increased from almost $65 million to $185 million. The continual increase in value of enslaved laborers further solidified the practice within the state.Ford 1988 p. 259
Country-republicanism South Carolina's form of republicanism ideology termed "country-republicanism" by historian Lacy K. Ford Jr. effected how people in the state thought about commerce and the economy. Within the state, political thought was distinctly homogeneous. Citizens believed that independence was to be vigorously reinforced by a disengaged government, that all industries were concomitant to agriculture, and that economic sovereignty was crucial for political sovereignty. The practice of slavery influenced these ideals. Enslavement was seen as an alternative possibility for men who had their economic activity circumscribed.Ford 1988 pp. 12, 20, 52 The use of enslaved black laborers was seen as egalitarian for whites.Pease and Pease 1982 pp. 172, 182 Furthermore, it made the concept of diligent work bringing about economic mobility incompatible with the distinction between the enslaved labor of black people and the aristocratic rule of the white planters.Pease and Pease 1982 pp. 171-172Downey 2006 p. 70
Agricultural staple crops Tobacco There were three periods of major tobacco cultivation in South Carolina. The crop was first planted near Charles Town in the 1670s where it became a major crop for twenty years until the lowcountry transitioned to rice. Tobacco reemerged in the 1780s in the state's backcountry. This second period of growth peaked in 1799 when South Carolina exported about ten million pounds of tobacco. Finally, the last large-scale planting of tobacco began in the Pee Dee region during the 1880s.Prince and Simpson 2013 pp. 1-3
The second period of major tobacco cultivation spurred major internal improvements due to the transportation needs of the bulky product's growers. After South Carolina produced 2.6 million pounds of tobacco in 1783, four times the amount produced a decade earlier, Governor William Moultrie called for a special legislative session the following year which resulted in the state improving roads, building bridges, and digging canals in order to improve the tobacco's pathway.Prince and Simpson 2013 pp. 17-20